Two major office deals will thrust nearly 2,500 white-collar workers into the neighborhood around 13th Street and New York Avenue NW within the next year and a half, a development likely to speed the transformation of that area, now notably short of good restaurants, shops and services.
The majority of the new white-collar population will move into what is now the city's biggest vacant office building at 1300 New York Ave. The Inter-American Development Bank signed a 20-year lease for the building last week, announcing that it will move all 1,400 of its employes into the structure from three buildings west of 16th Street.
The other big group of workers, as many as 1,000, will be Agriculture Department employes slated to move into 1301 New York Ave., across the street. Real estate industry sources said the General Services Administration, which has been negotiating with developer Dominic Antonelli for 1301 New York Ave., was expected to sign a 10-year lease this week. The 147,000-square-foot building has been completed and empty for more than a year.
Another boost for the neighborhood will be the new $40 million Hecht's department store now underway across 13th Street. A Hecht's spokeswoman said the company hopes to open the new store, replacing the old one at 7th and F streets NW, next November, in time for the 1985 Christmas shopping season.
The new Hecht's "will be an anchor for a lot of activity," said John P. Kyle, a commercial leasing agent for Coldwell Banker. "I think you will see satellite kind of stores pop up in buildings around there." He also predicted that "you'll find the quality stores on Connecticut Avenue beginning to come in here as the area gets populated with the right kind of tenants."
The neighborhood also will welcome the National Museum of Women in the Arts, scheduled for opening in the old Town Theatre building at the corner of 13th and New York Avenue in 1986. The National Museum of Women in the Arts Inc. bought the building a year ago and is raising money now for the project.
The restaurants needed to serve the new folks in the neighborhood are likely to start arriving soon, said Victoria Wakefield, a executive with United Press International, which occupies offices at 1400 I St. NW. Now that 1300 New York is leased, "anybody who had some plans to open a restaurant is probably going to act very quickly," she said. Nearly all the restaurants that attract the white-collar lunch crowd now are on 15th Street at the edge of the area.
For the commercial real estate industry, the leasing of 1300 New York "had a tremendously salutory effect," said one commercial sales agent, who, like many developers and other brokers, breathed a big sigh of relief on hearing the news.
The vacancy rate in east side office buildings soared in the early 1980s, with entire buildings standing empty in the run-down neighborhoods. The space glut was brought on by a commercial building boom that started in the early 1980s, only months before the recession delivered a body blow to the Washington real estate industry. Most tenants throughout the city stayed put, and if they did move, negotiated favorable terms in buildings west of 15th Street.
The building at 1300 New York was completed more than a year ago and became, particularly after its Canadian developer, Daon Development Corp., lost it to its construction lender, a symbol of the vast overbuilding in the east side.The existence of the Daon building "did create a softness in the market," holding down rents, said Stephen Goldstein, senior vice president of Julien J. Studley Inc.'s Washington office. Now that the building is leased, the entire area will be more attractive to prospective tenants, he said.
Another large Canadian developer, Cadillac Fairview, finally started construction on a mammoth project at 1001 Pennsylvania Ave. last August after waiting out the worst of the space glut. The project will eventually have 750,000 square feet of space in two phases. The first phase, under construction now, will have 400,000 square feet and is expected to be finished in the spring of 1986, said a company spokesman. The law firm of Fried, Frank, Shriver, Harris & Kampelman, has already signed a lease for 69,000 square feet.
Because of "rather optimistic news in the real estate market," Cadillac Fairview may start construction on the second phase of the project earlier than planned, "possibly sometime in 1985," said the spokesman, John Shooshan.
Most of a John Akridge Co. building at 1225 I St. NW, on which construction has just started, has been leased by the National Corp. for Housing Partnerships, which will occupy 153,000 of the building's 200,000 square feet.
Because of these and other deals in the area, "people have accepted the fact that 14th Street and extending east is a very important part of the city," Goldstein said.